DiNapoli: Niagara Falls, Salamanca facing dramatic revenue shortfalls

by jmaloni

Press release

Mon, Dec 10th 2012 11:30 am

Cities challenged by high poverty, unemployment rates

The cities of Niagara Falls and
Salamanca continue to be hampered by population loss, decreased property values
and a significant decline in revenue, according to two fiscal reports issued Monday
by State Comptroller Thomas P. DiNapoli. The reports are the first in a series
of fiscal profiles on cities across the state.

The reports detail the impact of the
ongoing dispute over casino revenue on the two Western New York communities.
The cities are home to casinos operated by the Seneca Nation - the Seneca
Niagara Casino and the Seneca Allegany Casino. Niagara Falls and Salamanca have
not received their "local share" of casino revenues since 2009, when the
Senecas halted gambling compact payments to the state. To date, Niagara Falls
has been deprived of $60 million in casino revenues. Salamanca had been
receiving more than $3 million annually as part of the compact.

"Niagara Falls and Salamanca face
more severe stresses than most other cities in the state, and the loss of
casino revenue has exacerbated their problems," DiNapoli said. "City officials
have been forced to make drastic budget cuts, spend down reserves and seek
emergency aid from the state. Unfortunately, the systemic fiscal problems that
have plagued these communities cannot be properly addressed until casino gaming
issues are resolved."

In Niagara Falls, the city has struggled due to a
number of socio-economic factors, according to the comptroller's report.

At its peak in 1960, Niagara Falls'
population was 102,394. By 2010, the city had lost 51 percent of its
population, the largest percentage drop in population for any city in New York
during that time frame.

Currently, 17.6 percent of families
in the city live in poverty and the city's unemployment rate (11.4 percent) is
significantly higher than the statewide average for cities (8.2 percent).

Other findings in DiNapoli's report
include:

•Niagara Falls has exhausted 76
percent of its constitutional debt limit and has $73.8 million in outstanding
debt.

•Nearly 14 percent of properties in
Niagara Falls are vacant and another 44.8 percent of property in the city is
listed as tax-exempt.

"The City of Niagara Falls commends
Comptroller DiNapoli for this independent assessment of the fiscal issues facing
our community," said Niagara Falls Mayor Paul A. Dyster. "The challenges raised
in this report present major hurdles for our city. But we remain optimistic
that our economic development activities, which are vital to attracting new
business investment and new visitors to the city, will be accelerated once the
state's dispute regarding casino revenues is settled. By reestablishing this
vital revenue stream, Niagara Falls can begin to reverse the negative trends
cited in Comptroller DiNapoli's report. My administration will continue to work
with Comptroller DiNapoli as we continue our efforts to redevelop our city."

In Salamanca, city officials are similarly coping
with a drop in revenues, a stagnant tax base and an increasing number of
families living in poverty.

In 2010-11, the city nearly depleted
its fund balance after suffering a 25 percent decline in revenue. The following
year, city officials used a one-time advance of $5 million in state aid to
cover operating costs and debt payments, but the city now faces a $2.5 million
shortfall and could run out of cash before the end of the current fiscal year.

The report also noted:

•Since 1950, Salamanca has suffered
a 34 percent decline in population and is now the fourth smallest city in New
York, with 5,815 residents.

•With much of the city's property
located on the Allegany Territory of the Seneca Nation, Salamanca has the
second highest number of tax-exempt properties in the state (62 percent).

•More than 15 percent of families in
Salamanca are living in poverty.

•The median income in Salamanca of
$32,741 is well below the state median of $55,603.

"The demands on city government did
not go away when casino revenues did," said Salamanca Mayor Jeffrey L. Pond.
"The city is still responsible for ensuring public safety, maintaining roads
and providing essential municipal services. Our sustainability, however, has
been complicated by the loss of these revenues and the continued erosion of our
tax base. Comptroller DiNapoli's report details why it so difficult to balance
our budget and pay for the vital services that our residents depend on."

In the coming months, DiNapoli will
issue fiscal profiles on select cities across the state to further inform
officials and citizens on some of the unique environmental and systemic
pressures facing New York's cities. As part of this effort, DiNapoli will also
release in-depth reports on some of the issues that contribute to the financial
pressures on local governments.

In September, DiNapoli's office
unveiled details of a new fiscal monitoring system that will calculate and
publicize an overall score of fiscal stress for municipalities and school district
across the state. The "early warning" system will identify those headed toward
fiscal crisis and give local officials and the public sufficient time to
consider options for turning things around. DiNapoli recently completed the
process of receiving comments from local officials about the process.

The monitoring system was announced
in conjunction with a report examining the demographic and financial
trends of New York's 61 cities (excluding New York City) over the past three
decades. The report found that many cities are struggling to balance budgets
and revitalize deteriorating local economies.